The Laws Governing Security Deposits

The Laws Governing Security Deposits

In ancient Rome, when apartments first appeared, landlords had to rely on guards to ensure their property remained free of damage by their tenants. Today, landlords have security deposits to protect their investments instead.

While you might think that security deposits are free money, there are rules for how you can use them. Knowing the security deposit laws will help you avoid a lawsuit from your tenant—and save you some legal fees!

Keep reading to avoid security deposit disputes.

What Can You Use Security Deposits For?

The landlord can deduct from the deposit for any unpaid rent or damage done to the rental property. However, you cannot spend the security deposit to fix normal wear and tear.

For example, if your walls are a little faded from years of exposure to sunlight, that’s not something you can expect to pay for with the security deposit. But if there’s a hole in the wall or paint has been spilled everywhere, those are things that the security deposit can cover.

Similarly, if there were normal repairs necessary after vacating the property (such as re-painting), you can also use the security deposit to handle those fees.

How Much Can Landlords Charge as a Security Deposit?

The amount you can charge is determined by state law. Under Pennsylvania law, a landlord can charge a new tenant up to two months’ rent in security deposit for their first year. Landlords can charge one month’s rent for all subsequent years of renting, not more.

As a note, Pennsylvania requires security deposits over $100 to be deposited into a bank account or an escrow. That way, it’s distributed to the right people in the event of a dispute.

How Long Can You Keep the Tenant’s Security Deposit?

You can hold the security deposit for an additional 30 days after a tenant moves out. Afterward, you must provide the tenant with an itemized list of deductions (if any) made from their security deposit.

If you want to keep possession of a tenant’s security deposit beyond 30 days, you must give them written notice stating why and how much longer it will take for them to get their money back. Failure or refusal to do so will probably result in a lawsuit from the tenant.

How to Document How the Security Deposit Was Spent?

Documentation is key for security deposits. You’ll want to keep receipts and records of what the deposit paid for, as well as a record of how much you returned in cash or check to your tenant.

The best way to document this is with a thorough checklist that shows every item that needs repairs, as well as the cost of each item. Even if you only fix a crack, take note of it. This might seem like overkill in some situations, but it could save headaches later down the line.

Keep Your Rental Property Safe for Future Renters

Security deposits are one of the most important parts of being a landlord. They can help you recoup the money you lose when a tenant leaves before the end of their lease, and they also ensure that your property will be in its best shape for future renters.

Collecting security deposits can be a bit nerve-wracking, and sometimes you need help from the experts—like us here at Pittsburgh Property Management. We’ll help you find responsible tenants and make it easy for them to pay their security deposits. All you have to do is contact us and we’ll handle everything else.

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